Supply Chain Normalcy? Think Again.

April 18, 2023
12:54 pm

Over four-hundred days of war in Ukraine. Growing tensions between China and trading partners. Unrest in Sudan. The global supply chain is built on three assumptions: rational government policy, availability of reasonably priced logistics, and low variability. In March 2023, the Global Supply Chain Pressure Index fell to the lowest level since November 2008. While many might clap their hands and exclaim the end of three-years of unprecedented supply chain disruption, I say, “Not so fast.” I feel like we are riding a gondola in the middle of an intense snowstorm. The ride is uphill, but the visibility is low.

What is normalcy? Yes, we have achieved greater normalcy in transportation. As consumer spending fell, the days of escalating ocean freight and extreme shipping variability eased this year. In the spring of 2022, Asia/US ocean container rates resumed pre-pandemic levels and congestion eased in November 2022 into California ports. However, variability and global unrest is rising.

The peak disruption was in December 2021. In March 2023, the level of disruption fell to a level seen in November 1998.

Figure 1. The Global Supply Chain Pressure Index

With mounting inflationary pressures, challenges continue. Cash is king and financial viability is the overarching goal. The most significant factor to improve resilience (the organization’s ability to drive reliability of business results in the face of variability) is organizational alignment. While consultants wave their hands and tout new approaches, the most important step that a business leader can take today to improve future performance is the development of a shared vision for the organization on supply chain excellence. For organizations layered in functional metrics and driving a cost agenda, this is a tough nut to crack. Tougher than most understand.

Figure 2. United States Inflation Rates and GDP

Inflation is the highest in forty years. Traditional planning processes focus on volume-based decisions, but not the trade-offs of market price shifts and product mix changes.

Challenges

Traditional definitions of supply chain excellence focus myopically on cost but are too slow in making decisions in inflationary periods. Companies need quicker answers with better insights, but current organizational processes are slow, putting supply chains on the back foot. During the pandemic, companies struggled with planning systems turning off the optimizers, and using the technology as a system of record.

S&OP is too slow and cannot achieve the needed alignment. Process latency, the time for an organization to make a decision using a traditional S&OP process, is two-to-six weeks. In the face of variability, this is two-to-six weeks too long to make allocation or procurement decisions.
Shift in cycles. Need for design. The traditional leader values cost reduction but is blind on how to value time. Over the past three years, supply chain cycles shifted. Currently, the cycles are out of balance. Order cycles–the requested time from order to delivery–decreased while supply cycles –the time to procure materials– increased. E-commerce models exacerbated this trend while supply variability challenged order reliability.
Higher variability. Demand and supply planning processes assume low variability and use history as a guide in planning the future. However, today, supply chains are untethered. History is a poor guide for the future. The order is a poor proxy for demand. To side-step this issue, build planning processes to use market data. Abandon the processes focused on multiple layers of meetings to improve collaboration of organizations that are not aligned, but focused on transactional data.
Bloom off the rose on digital transformation. The answer is not digital transformation. In the survey, 48% of companies were driving digital transformation, but the only element that improved performance was descriptive analytics. Companies driving digital transformation did not outperform their peer groups during the past three years. The reason? Digital supply chain transformation is over-hyped with a lack of clarity on value. The central problem is the lack of a clear roadmap to define core capabilities.

Steps to Take

Here are three steps to take:

Build adaptive modeling. Align the organization and focus resources on building adaptive modeling capability. (I don’t care what you call it, but network design, what-if analysis, simulation and digital twin approaches grow in importance.) Train teams to model variability and build a planning master data layer to understand layers of variability. (A planning master data layer measures and tracks shifts in lead times, conversion rates, and quality. Feed the adaptive modeling environment market planning master data.)
Side-step large-scale digital transformation projects. Digital supply chain projects never achieved promise. In this time of variability, focus less on hype and more on pragmatic delivery. Show the technology vendors touting digital and AI transformation the door. (Yes, better optimizers are a blessing, but now, focus small to visualize and align on alternatives.)
Build in-market sourcing. Make divisions and regions self-sufficient. Rationalize global strategies to focus on building markets based on in-market sourcing. Align the organization to a balanced scorecard approach and use adaptive modeling to drive discussions cross-functionally. Actively design supply chain flows (not just assets) on a quarterly and monthly cadence. (I find that it is easier for organizations to align when they see the impact of a model and have the ability to fine-tune and see alternatives.) To accomplish this goal avoid hardwiring planning platforms to transactional systems.

What Is the Value of A Network?

I continue to hope that organizations will get more serious on building networks. Currently, I am working on a study to understand the value of synchronizing contract manufacturing with in-house manufacturing and procurement. Today, companies believe that network relationships are essential, but most funding goes to investments in enterprise investments. The average brand owner outsources 28-35% of manufacturing, but most coordinate using only spreadsheets and email. Automation is an opportunity, but what is the value? This is what we are trying to assess.

Interested? We would love to have you participate in a study to understand the current state, the value of automation, and the business drivers. If you click the link, please be assured that all responses are reported in aggregate, and the names are anonymous. Companies participating get a copy of the results.

About the Global Supply Chain Pressure Index (GSCPI): The GSCPI integrates a number of commonly used metrics to provide a comprehensive summary of potential supply chain disruptions.

Warning: Sidestep the Narrative of the Misguided Goldiggers

August 10, 2026 4:58 pm

Ten years ago, I started writing a book titled Stories of the Misguided Gold Diggers. The book was a collection of stories from two decades of stories of technology leaders perpetuating the myth of integrated end-to-end supply chain planning.

I dusted off the manuscript on Saturday. I think that we have a new chapter. Companies focused on putting Artificial Intelligence (AI) on top of existing architectures are putting AI Stupid on steroids.

The Myth of End-to-End Planning

July 31, 2026 9:14 pm

Supply chain planning, supply management, supply chain execution, network design, and transportation/logistics management operate in silos. Not much has changed over four decades. The connections flow back through transactional systems: order-to-cash and procure-to-pay. There is a myth that companies can buy an end-to-end supply chain management solution. This is largely a myth. Here we explain.

Lead Time: A Broken Gossamer

July 16, 2026 6:38 pm

If you are struggling with supply chain planning, dancing in the light of shiny objects, and scratching your head, please read on. My goal is to help you.

Please do not AI Stupid. What do I mean? AI Stupid is putting agents and agentics on top of existing architectures believing that making them faster and hands free add value. To me, this is fools play.

I love AI. I am excited about new technologies. To this end, I want to shine a light on how new technologies can help address the black holes and inconsistencies in today’s supply chain, which largely stem from the limitations of the first generation of supply chain planning and execution technologies. In this blog, I give you three places to start.

Do You Need a Supply Chain Coach?

July 9, 2026 5:27 pm

Supply chain is where the rubber hits the road. For a public company, over 40% of market capitalization is tied to the trade-offs between growth, operating margin, inventory management, and Return on Capital Employed.

The road for supply chain improvement is fraught with issues. Here we share some and offer some advice.

Is your Supply Chain AI Ready?

June 11, 2026 2:39 pm

A simple quiz to assess an organization’s AI readiness.

The pace of change is fast and furious. Every day, technology advances faster than we can digest. A great challenge to have.

Determining whether a supply chain is “AI-ready” is less about technology and more about the gray matter between the ears of supply chain leaders. Leadership, alignment, and clarity of goals matter.

Too few companies are clear on the definition of supply chain excellence. Measuring and rewarding functional metrics reduces the firm’s value. Putting agentics on top of today’s processes can make bad practices run faster, reducing value.

The toughest job for the supply chain leader is challenging existing supply chain paradigms that were defined by the limitations of decades of supply chain technologies. As the curtain lifts on the potential of new forms of technology, process redefinition is our opportunity, but only if we are clear on what drives value. (Here, I link to the Supply Chains to Admire reports to help you define value. The next report will be published on June 23rd, along with my Dynamic Benchmarking Product, to help you define value in the face of your AI readiness. More information about the launch is at the bottom of this blog.)

Case Study: A Scrappy Demand Management Approach

June 9, 2026 5:37 pm

This study of Franklin Sports shines a light on the work that needs to be done at the sales account level to challenge a retail forecast, and also highlights the importance of a new technique for a forecast engine — reinforcement learning.

Artificial intelligence comes in many forms — large language models, generative AI, machine learning, unstructured text mining, deep learning, neural networks, reinforcement learning, agents, and agentics. While the industry is wigging out about agentics, I think reinforcement learning is a great step forward in the journey of Artificial Intelligence.

Supply Chain Shaman